Bank Board Letter — July 2015
Bob Gibson

A recent FDIC report notes, “New technologies have certainly created convenient new ways for bank customers to conduct business, yet there is little evidence these new channels have done much to replace traditional brick-and-mortar offices where banking relationships are built.‚ Although branches remain relevant, they must adapt to a rapidly evolving environment and customer. Remote deposit capture is a viable solution banks can deploy to reduce costs and inefficiencies in the branch and provide a better customer experience.

FDIC research reveals that while brick-and-mortar branches remain prevalent in today’s financial services industry, the way customers interact with their bank is changing. Self-service transactions are simplifying branch visits and reducing the need for tellers, but also they’re redefining the teller’s role in helping customers solve more complex issues, provide expert advice and sell products. Banks are experimenting with new branch designs, reduced footprints and a variety of self-service choices from expanded ATM features to interactive video, all with the goal of making every penny and square foot count while enhancing the client experience.

The growing focus on the economy of self-service transactions makes commercial RDC a powerful tool for branch transformation. Increasing commercial customers’ use of this tool helps improve efficiency, enabling branches to decrease the number of full-time employees required to process commercial check deposits. With fewer employees, the branch footprint and costs can be reduced.

Both bankers and commercial depositors are finding value in RDC services. A Cummins Allison and Branmark Strategy Group survey revealed that 24 percent of banks surveyed believe RDC helps them attract new commercial accounts, and 11 percent reported that RDC helps lower operational costs.

On the customers’ side, the same survey revealed that 45 percent of depositors feel that time savings when preparing deposits is the overwhelming benefit of electronic deposit. Additional benefits cited include cost savings from financial institutions by not depositing paper checks, time savings from not going to the bank or credit union to make a deposit, extended deposit deadlines, and quicker access to funds versus conventional deposits.

With both bankers and depositors realizing a broad range of benefits, interest in RDC is growing. Research firm Celent is reporting a 10 percent growth in the number of check scanners deployed for commercial RDC over the past year and expects continued growth of deployed scanners to commercial locations over the next three years.

However, the Cummins Allison study revealed an interesting disconnect between the bank and its depositors that may be inhibiting greater deployment of RDC. That study finds that 75 percent of banks offer RDC to commercial accounts, and two thirds of banks that offer RDC still have less than 5 percent of commercial accounts using the service. Yet depositors said that they would be interested in a service that would allow them to scan and transmit check images to their financial institution. Banks need to raise awareness of the existence and the value of RDC and increase the adoption rate by commercial depositors.

To reconcile this disconnect, financial institutions must more effectively market the aspects of RDC that are most important to their commercial depositors. Misconceptions of what businesses need or want can result in a failure to communicate a compelling message. For example, contrary to what banks believe, what commercial depositors most value is the time savings when preparing deposits.

Banks must also focus on education and training, and that includes their own employees. Branch employees have vital, face-toface interactions with business clients. They can give clients a thorough understanding of the service and what it offers. Then, building awareness of RDC and promoting its benefits becomes a normal part of servicing the client in the course of day-to-day operations.

Nearly 70 percent of financial institutions responding to the Cummins Allison survey chose active promotion of their RDC offering as the biggest contributor to clients initially adopting the service. But while promotion contributes to adoption numbers, client awareness often needs reinforcing.

A client’s initial exposure may be followed by multiple stages of awareness. For example, clients may be aware that there is a service called RDC, but are unsure of what it is. Or they may be familiar with it, but not understand how it might be useful for them. Or they may be concerned about costs and training. This may require more than one contact with the client to provide a more thorough understanding of how their business can benefit from the service.

By learning about prospects’ specific situations, one can help them visualize how an RDC solution can save them time and make them more efficient, ultimately saving them money.

In the survey, depositors who processed 100 or more checks were more likely to show interest in electronic depositing. Other factors to consider include company size, geographic spread, transaction volumes and the amount of business conducted with the depositor. Banks may also consider re-approaching commercial clients lost due to the absence of RDC services if the bank now offers RDC.

At the core of a successful RDC program is the equipment, and if it is not accurate and fast, it can be a deterrent to RDC adoption. The majority of depositors surveyed used a scanner provided by their financial institution, and half of them indicated that the service could be better due to limited scanner performance. Providing your customers with the fastest, most accurate scanners will add great value and assist in expanding RDC adoption.

Increasing adoption of RDC services requires just a few simple steps. Ask questions and listen to customers to discover their specific needs and their knowledge of the service. Educate customers and employees. Develop messages that resonate with more than one audience. Provide equipment that performs satisfactorily, or empower clients to purchase equipment on their own from approved vendors. Finally, and most important of all, request client feedback to fine tune treasury services and ensure that customers are satisfied. These simple steps are the keys to increased RDC adoption, and they support branch transformation. Reap the benefits.

Bob Gibson is vice president, branch operations at Cummins Allison.